international vertically integrated pipe and wheel company (TAC) "Interpipe" in January-September of the current year received a $ 200 million underlying profit (EBITDA), a 45% increase over the same period last year due to the high demand for railway products in the markets of the CIS and Europe. This is stated in the unaudited consolidated financial results of the company according to IFRS for the first nine months of 2019.
Share railway division in the total EBITDA for the 9 months of 2019 reached 61%. Railway EBITDA of the segment amounted to 123 million U.S. dollars (an increase of almost 4.5 times yoy). Such results were possible due to the high demand for railway products in the CIS market and the suspension in August of actions 34,22% of the anti-dumping duties on railway wheels in the Customs Union.
"During the first 9 months of 2019 Interpipe increased revenue and EBITDA, despite the General downturn in the global pipe market. We completed the restructuring of its debt and continue to invest in modern equipment for production of pipes and wheels. Among the priorities of the Company geographical diversification and development of premium products for the oil and gas and rail industry," said CEO Fadi Hraibi.For the 9 months of 2019, the revenues of the company INTERPIPE increased by 5% compared to the same period last year to 863 million USD due to growth in sales of railway products. Revenue from sales of railway products increased by 36% yoy to 297 million US dollars, due to the high demand in the CIS market. At the same time, revenue from sales of tubes decreased by 7% yoy, to 535 million U.S. dollars, mainly due to the fall in sales of oil pipes (OCTG) by 27% yoy.
At the same time, EBITDA of the tube division increased by 2% compared to the same period last year, to 48 million U.S. dollars. Negatively on the results of the division was affected by the decline in drilling in Ukraine and low demand in other regions, for example, in the U.S. market. An additional negative factor was the expiration of the agreement (Suspension Agreement) on the non-use of 7.5 per cent anti-dumping duties in the US against OCTG in July 2019. These factors influenced both the sales volumes and margins.
9 months 2019 capital investment by the Interpipe company amounted to 42 million US dollars, which is 8% higher compared to the same period last year. Investments in strategic projects increased by 19% yoy to 19 million US dollars, while investments in projects maintain fixed assets remained at last year's level and amounted to 22 million US dollars. The company's priority was to increase facilities for finishing, cutting and heat treatment of pipes at INTERPIPE NTRP and INTERPIPE Niko tube, and investment in production line of new wheels and axles.
as of September 30, 2019 cash balance amounted to 219 million US dollars (+67% compared to 31 December 2018), thanks to stable operating cash flow.
In the attached to the release of the table indicates that Interpipe for 9 months of 2019 has reduced steel production by 5% compared to the same period last year to 702 thousand tons, reduced pipe production by 8% to 477 thousand tons, but increased the production of railway products by 6% to 153 thousand tons.
As earlier reported, Interpipe in the first half of 2019 received 125,44 million dollars of EBITDA, which is 37,4% more than in the first half of last year.
Earlier in the Memorandum on the restructuring of Interpipe's debt explained that the group's financial performance in previous years was heavily influenced by adverse market changes caused by the decline in oil prices and other commodities, as well as the recent geopolitical events in the region. In the period from 2012 to 2016 revenue and EBITDA of the group decreased by 71% and 85% respectively, which led to a reduction in the ability of the company to repay the debt. In 2013, the group has not fulfilled some financial obligations and missed scheduled principal payments in the amount of 106 million U.S. dollars. This has led to cross-defaults on loans the group's and the beginning of the process of financial restructuring.
As noted by the company, since revenue and EBITDA recovered, an increase in 2017 by 59% and 158%, respectively, compared to 2016. In 2018, the total revenue of the group grew by 33.3% – up to 1 billion 74.2 million dollars, EBITDA – by 31.8% to 157,6 million dollars, and net loss was decreased by 28.5% to $ 48 million.
it is among the ten largest producers of seamless pipes, is the third largest producer of forged railway wheels in the world.
